23rd October 2014
You may have read about the intestacy laws in England & Wales changing recently. On 1 October, they got a revamp and as anticipated, it is only married couples and civil partners who are set to see any benefit from the modifications. There are still no statutory rules to give the growing number of cohabiting couples a right to a deceased loved one’s assets. David Downie, technical manager at Standard Life explains what it means…
The intestacy rules determine how your estate is shared if you die without having a valid will. Unfortunately some *61% of UK adults currently don’t have a Will, so unless we improve on that statistic, these new rules will be setting out the terms for a lot of people.
The purpose of the change is to improve the rights of married couples and civil partners, both with and without children.
Married couples/civil partners who don’t have children
Under the new rules, if you die intestate and have no children, your estate will be inherited entirely by your spouse or civil partner. Prior to the changes, a share of the estate could have been automatically inherited by parents or siblings – leaving less for you if you are a spouse or civil partner. It’s easy to see why this change has been made – it prioritises the person you’ve chosen to spend your life with. But remember, if you’d still like to leave something to your parents or siblings or friends, you can. You just need to make a Will.
Married couples/civil partners who do have children
The position for those with children has been simplified too. Now if you die intestate and you leave your spouse/civil partner and also children behind, your spouse/civil partner will inherit three elements from your estate :
The remaining half share still goes to your children and if they are still minors, their share will be held in trust until they reach age 18. Previously your spouse or civil partner would have only been entitled to a right to “an income” from one half of the balance left over. But now they receive their half share outright.
While these changes strengthen the rights for surviving spouses and civil partners, they won’t be to everyone’s liking. For example, some people may like more of their wealth preserved for their children in case their spouse remarries. Others may not want anything to go to their children initially, and would prefer that their children only inherited once both parents were gone. The only way to deal with specific wishes such as these is by making a will.
As mentioned, it is still the case that there is much less ‘inheritance protection’ for couple who cohabit. Pleas for them to be given similar rights to married couples and civil partners continue to go unanswered. But all is not lost. If marriage vows are not for you, and you are living with your partner, you should at least vow to make a Will so they can benefit. Otherwise, your estate could end up passing to parents or siblings instead.
That said, it is still possible for someone to make a claim on the estate of their cohabiting partner in England and Wales. The Inheritance (Provision for Family and Dependants) Act 1975 allows someone to challenge the distribution of an estate if they feel they have not been adequately provided for under the will or intestacy. These rules have also been strengthened. But it remains a complex area which is best avoided if possible, by making a Will which benefits your partner and removes uncertainty about who gets what. By not making a Will, you are leaving your partner to face the prospect of having to go through the courts to get a slice of your estate, which is a stressful and costly thing to have to do at an extremely difficult time.
Having the Will to take control
The changes to the inheritance rules might improve things for some people. But these new rules are still Plan B. For real peace of mind, it’s clear what we should do. Plan A should always be to make a Will so that you set out your own terms and have more control and the right people benefit when you’re no longer around.